After C completed the ratio analysis for S&S Air, M and T approached him about planning for next years sales. The company had historically used little planning for investment needs. As a result, the company experienced some challenging times because of cash flow problems. The lack of planning resulted in missed sales, as well as periods when Mark and Todd were unable to draw salaries. To this end, they would like C to prepare a financial plan for the next year so the company can begin to address any outside investment requirements. The income statement and balance sheet are shown below:

QUESTIONS for S&S AIR: 1. Calculate the internal growth rate and sustainable growth rate for S&S Air. What do these numbers mean? 2. S&S Air is planning for a growth rate of 12 percent next year. Calculate the EFN for the company assuming the company is operating at full capacity. Can the companys sales increase at this growth rate?